# Lender wants to be loss payee on your excavator? What that means

> Financed and leased equipment usually needs physical damage coverage that names the funder as loss payee. Set it up before delivery day so funding does not stall.

By Elie Mendlow · Published November 11, 2026
Section: Business Funding › Equipment & Invoice Finance · Series: Contractor Desk (https://mcafax.com/notebook/series/contractor-desk)
Canonical: https://mcafax.com/notebook/contractor-financed-equipment-insurance
Source: MCAFax, The Broker's Notebook (https://mcafax.com/notebook). MCAFax is not a lender or a law firm.

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No. Loss payee is about who gets paid when the machine is damaged or stolen. Additional insured relates to liability coverage, so ask your agent which one the funder's document requires.

## Questions readers ask

**Is loss payee the same as additional insured?**

Rental agreements set their own insurance terms, separate from any financing. Read the rental contract and ask your agent before the unit leaves the yard.

**Do I need the same coverage on a rented machine?**

When the loan is paid or the lease ends, ask your agent to remove the funder from the policy. Keep the funder's payoff letter and lien release in the same folder.

**What happens to the loss payee when the machine is paid off?**

Many funders want proof of coverage before they pay the seller.